EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 11, Problem 5PA
Subpart (a):
To determine
Public goods.
Subpart (b):
To determine
Number of movies need to rent.
Subpart (c):
To determine
Total cost and surplus.
Subpart (d):
To determine
Public goods and benefits.
Subpart (e):
To determine
Public goods and incentives.
Subpart (f):
To determine
Public goods and incentive.
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Which of the following is true?
A. the firm produces based on the private marginal benefit and private marginal cost
B. the welfare of the society is maximized if the sum of the private and social marginal benefits is equated with the sum of the private and social marginal costs
C. there is an overproduction of goods with negative externality or an underproduction of goods with positive externality because the social costs and social benefits are not considered in the production decisions of the firm
D. all are true
E. none is true
Explain 'negative externalities,' defined in class as 'hidden costs' making the difference between the 'public market price' and the 'true price' of a product. Illustrate using an example of a product with a negative externality
how do you read this type of graph and know whats going on
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- Problem 5: complete the question belowarrow_forwardCars impose many external costs on society: carbon dioxide emissions that contribute to air pollution, congestion on roadways, and so on. Therefore, the market equilibrium quantity of cars is not equal to the socially optimal quantity. The following graph shows the demand for cars (their private value), the supply of cars (the private cost of producing them), and the social cost of cars (the private cost and external costs).arrow_forwardWhat would happen if the government subsidized consumption of this product because it has positive externalities in consumption?arrow_forward
- Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities? A. the social cost of production. B. the private cost of production. C. the external cost of production. D. the explicit cost of production.arrow_forwardQUESTION 38 | To internalize a positive externality: a. the consumers of a good could receive a subsidy equal to the external benefit resulting from the production or consumption of the good. b. a producer's costs could be increased by an amount equal to the external benefit resulting from the production of the good. c. consumers of the good could pay a tax equal to the external benefit resulting from the production or consumption of the good. d. Both (a) and (c) are correct O E O O O D B A с e. none of the abovearrow_forwardProblem 5 refers to the following setup: The demand curve in a market is Q = 6-P. Firm A and B are the only sellers, their marginal costs are constant at 2 and 3 respectively, and there is no fixed cost. They produce identical goods. 5. a) What is the socially efficient outcome? (Specify the quantity for each firm.) b) Find the quantity produced by each firm and the price under Cournot competition. c) What is each firm's profit under Cournot competition?arrow_forward
- If the government subsidizes vaccination against influenza to internalize the externality, should it impose the subsidy on consumers or producers of flu vaccines? How large should the subsidy be? How much less per flu vaccine would patients (i.e., consumers) pay? How much more would manufacturers (i.e., producers) of flu vaccines receive?arrow_forwardNegative externalities and fast food Task 6b Explain the concept of negative externalities Point value In no more than 200 words, briefly explain the concept of negative externalities. 4 points Does eating too much fast food generate a negative externality? Why or why not? Format - Evidence of negative externalities | Reflection (written) Point Answer box value Negative externalities and fast food Task 6c | Negative externality: Consuming too much fast food Create two demand and supply diagrams to demonstrate the following: In your first diagram show the negative externality of consuming too much fast food. Carefully label your diagram and identify the deadweight loss. In your second diagram add a tax to this market. Highlight what happens to consumption. In a dot point below your last diagram briefly tell us whether the second diagram has a deadweight loss. Point value 8 points Format - Evidence of negative externality of consuming too much fast food | Reflection (written) Answer box…arrow_forwardHow would I solve b,c, and darrow_forward
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